Alphabet is considering investing in Flipkart alongside Walmart — insiders explain why it makes sense
Walmart announced on Tuesday it would take a 77 percent stake in the company for $16 billion. Of that $16 billion, $2 billion was "new equity funding" intended to spur growth. Walmart said that it was also in discussions with "additional potential investors" to join the round, though it would retain majority ownership. It did not mention any possible investors by name.
Although no deal has been signed, several people close to the company have thoughts on why a deal would make sense.
Amazon CEO Jeff Bezos and Alphabet CEO Larry Page.
Google's parent company Alphabet is in talks to invest in Indian e-commerce company Flipkart alongside Walmart, according to two people familiar with the deal.
Walmart announced on Tuesday it would take a 77 percent stake in the company for $16 billion. Of that $16 billion, $2 billion was "new equity funding" intended to spur growth. Walmart said that it was also in discussions with "additional potential investors" to join the round, though it would retain majority ownership. It did not mention any possible investors by name.
The conversations with Alphabet are ongoing and no deal has been reached, but one person familiar with the talks says that the $3 billion Alphabet stake floated by Indian press is "aggressive," suggesting that any investment would be less. This person also said that it wasn't clear whether the investment would be through Alphabet's growth investment arm, Capital G, or its corporate fund.
Although no deal has been signed, several people close to the company have thoughts on why a deal would make sense.
"Rumors of Google investing in Flipkart have swirled around for a bit, but I suspect the timing and vehicles of investment never lined up as well as it does with this Walmart deal," says Punit Soni, Flipkart's former chief product officer, who also worked at Google for eight years. He currently runs a health-tech startup called Suki.
Soni, who has no direct knowledge of a deal, speculates that Alphabet's would be less directly related to e-commerce, and more tied to the size of the market and keeping ahead of Amazon, which was also reportedly interested buying Flipkart.
"There is a strong benefit in people buying a lot of Android phones and e-commerce in India is a huge conduit for that," Soni said. "So there's a little bit of a 'next billion users' strategy and a bit of making Amazon sweat."
In the United States, Google and Walmart have already teamed up against Amazon through the search giant's Express shopping service, which allows users to have Walmart products delivered through Google.
Alphabet may also be interested in Flipkart as a way to get a leg up against cloud rivals Amazon and Microsoft.
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Walmart is buying a controlling stake in Indian e-commerce behemoth Flipkart.
Walmart will invest between $10 billion and $12 billion for a controlling stake of more than 51%.
The deal values Flipkart at about $20 billion.
(Reuters) - U.S. retail giant Walmart Inc is acquiring Indian e-commerce player Flipkart, the chief executive of one of Flipkart's biggest shareholders, SoftBank Group <9984.T>, said on Wednesday.
Walmart would invest $10 billion-$12 billion in Flipkart for a controlling stake of more than 51 percent at a valuation of about $20 billion in what is the U.S. retailer's biggest acquisition of a business, Reuters has reported earlier.
"Last night, Japan time, it (Flipkart) reached final agreement that Walmart is purchasing Flipkart," Masayoshi Son said on a SoftBank earnings conference call, ahead of an expected announcement by Walmart-Flipkart later on Wednesday.
Buying a stake in Flipkart, which sells everything from soaps to smartphones and from books to clothes, gives Walmart access to the vast Indian e-commerce market that, according to Morgan Stanley, will potentially be worth an annual $200 billion in a decade.
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